Disclosing Money in Elections

The Supreme Court, in its Citizens United decision, opened the door to an unfettered, unregulated influx of money into elections from corporations and labor unions. A first step in addressing the multitude of problems the decision created is disclosure. It is incumbent upon Congress to immediately create a robust, rapid transparency regime that takes full advantage of technology. This requires real-time, online transparency on every level of influence, from independent expenditures to lobbying to bundled campaign contributions.

Real-Time Disclosure – One Simple Fix for a More Informed Public

In anticipation of an upcoming decision by the Supreme Court in McCutcheon v. FEC, Congress should enact legislation to mandate near real-time disclosure of hard money contributions to parties and candidates, so that citizens can better gauge whether their elected officials are representing their interests or special moneyed interests. Transparency’s impact is diminished when information about campaign funding is delayed by weeks or months. A less informed public and less accountable system may be the goal of opponents of more disclosure, but it is unacceptable in the Internet era where information about everything other than government is publicly available everywhere, with the tap of a screen or click on a mouse.

If, as many predict, the court uses the McCutcheon case to continue its attack on contribution limits, it will be possible for a single donor to contribute more than $3.5 million to a party’s candidates and committees. And if current laws are not changed to require timely disclosures of such contributions, the public will have to wait months to find out who gave how much to which candidates. If a candidate or elected official knows who is giving to his election efforts in real time, the voters who put him or her in office should have the same access to that information.

Congress should not wait until after the McCutcheon case is decided to act on a real-time hard money disclosure bill. As we have seen in the four years since Citizens United was decided, Congress cannot be relied upon to increase disclosures after the Supreme Court has triggered a new way to fund elections. Furthermore, even if the Supreme Court doesn’t undo current limits, candidates are still free to solicit five- or six-figure contributions from the wealthiest members of our society. During the 2012 elections, both presidential candidates solicited (extorted?) access and influence buying contributions of $70,800 from single donors. Delaying disclosure of such large contributions is not necessary from a technical or technological standpoint, nor is it required by the Constitution.

The DISCLOSE Act of 2012

The DISCLOSE 2012 Act (H.R. 4010 and S. 3369) is a crucial step toward a more transparent system that will shine a light on the secret corporate and union money that is corrupting our elections and our elected officials.

The Senate bill will create robust reporting requirements for super PACs, corporations, unions and nonprofit organizations that decide to make campaign expenditures. It will also require reporting of transfers by those groups to others making such expenditures, to prevent the money laundering that currently makes it easy to hide huge campaign contributions. The bill includes a mechanism to ensure that if a group’s donors wish to remain anonymous may do so by indicating that they don’t want their contributions to the group used for political purposes.

The House bill goes a step further. It would also require ads to contain disclaimers by the top officials of such groups, similar to the stand by your ad mandates required of candidates. In addition, shareholders and members of outside groups will be informed of campaign spending, and lobbyists will be required to report their spending on independent expenditures and electioneering communications.

Unfortunately, the bill faced serious opposition in Congress, led by Senator McConnell. He and other opponents of the bill engaged in a campaign of misinformation, making claims that the bill is unconstitutional, that it treats labor unions differently from other organizations and even that the bill is designed to create an “enemies list” to be used by the Democratic administration (this, even though the would disclose donors on the left and right).

The reality of the DISCLOSE Act is actually quite simple. It is a constitutionally appropriate method to ensure voters are educated as to the special interests that are paying for electioneering communications, and that a light shines on dark money to reduce corruption and the appearance of corruption in our political process.

The FCC Political Ad Database

Earlier this year, the Federal Communications Commission adopted rules to create a centralized, publicly accessible database of information about political ad buys. The rule would require the top four broadcasters in the biggest fifty media markets in the country to make their political files public, online. We submitted comments encouraging these efforts in December 2011.

The SUPERPAC Act

Shortly before the second anniversary of the Supreme Court’s disastrous Citizens United decision, the Sunlight Foundation drafted the Stop Undisclosed Payments in Elections from Ruining Public Accountability Act (the SUPERPAC Act), a streamlined disclosure and disclaimer only bill. We are pleased that on first blush, DISCLOSE 2012 meets the goals of our draft bill.

Our goal for the SUPERPAC Act has been to reignite the effort and that members of Congress will decide to stop serving their self-interest and start acting in the public interest by taking a step in favor of transparency. The SUPERPAC Act was designed to be a disclosure only bill, largely including the transparency provisions of the DISCLOSE 2010 Act while leaving out some of the bans, carve-outs and other provisions that made DISCLOSE 2010 controversial.

Highlights of the bill include the following:

  • Ensure disclosure of donors who fund independent expenditures and electioneering communications made by Super PACs or other 501(c) organizations. Donors giving to an organization for other purposes may remain anonymous if the organization establishes separate accounts for non-election related spending.
  • Require real-time, online disclosure of all reports. Data must be in searchable, sortable, machine-readable formats and reports must include unique IDs for all filers.
  • Require disclaimers (stand-by-your-ad statements) and identification of top funders in the ad.
  • Require registered lobbyists to report their spending on independent expenditures and electioneering communications.
  • Require all candidates and committees to file electronically with the Federal Election Commission.

The DISCLOSE Act 2010

The Citizens United decision paved the way for an influx of influential corporate dollars into elections, but the Court also upheld disclaimer and disclosure requirements, noting they “impose no ceiling on campaign-related activities” and that “transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Using this strong endorsement of transparency, Democratic leaders in Congress attempted to enact legislation to blunt the impact of the Citizens Uniteddecision. The DISCLOSE Act had, at its core, transparency provisions designed to shine a light on the largest, most distorting corporate and union independent expenditures and electioneering communications. The bill passed the House with only two Republican supporters but was blocked twice by Republican filibusters in the Senate.

While the DISCLOSE Act ultimately was not enacted, undisclosed money in politics still presents a serious concern. We thoroughly believe that a legislative solution to promote transparency and accountability in elections regardless of the amount of money spent is the best option. We hope the SUPERPAC Act may succeed where the DISCLOSE Act did not.

Other Sunlight Action Post-Citizens United

Other Proposals

While Sunlight believes that addressing transparency concerns raised by the Citizens United decision through legislation is the best option, others have suggested a number of alternative methods. These have included:

  • A Constitutional Amendment: A slew of constitutional amendments have been proposed to counteract the Citizens United decision. The first was one introduced in January 2010, and many more have been introduced since. Public Citizen is one group that has been a major proponent of this recourse.
  • An Overhaul of the Public Financing System: Another option that has been suggested is to enact new public financing plans. According to Politico’s Richard Hansen, “If we worry about corporate dominance of money in the political process, how about trying to subsidize some campaigns through public financing. Today’s opinion does not take public financing plans off the table, but an earlier Supreme Court opinion, FEC v. Davis, likely takes the most attractive portion of public financing plans out.”
  • An Increase in Shareholder Involvement. Requiring shareholder approval for corporate funds to be used for campaign expenditures has been suggested as a deterrent for corporate donations. The Shareholder Protection Act of 2011 aimed to implement measures to this effect, but has not been passed into law. We are in support of this act.
  • The Development of SEC Rules. There have been a number of petitions asking the Securities and Exchange Commission to develop rules that would require public companies to disclose to shareholders the use of corporate resources for political activities. One petition was submitted by ten law professors in August 2011. Another came from the Brennan Center for Justice in December 2011.

Policy Contact

Call or email the Sunlight Policy team.

John Wonderlich

Policy Director (202) 742-1520 x234